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The Best Tax Software of 2016

Tax expert Susan Renzo and our research team spent 50 hours reviewing 17 established tax software brands across 12 key features to rank the 10 best for 2016. The top three tax software products for 2016 were TurboTax, H&R Block, and TaxAct.

 

Advice for Upcoming 2016 Tax Deadlines

Normal deadline: April 18, 2016

Usually the tax deadline is always April 15, but in 2016 there is the Washington, D.C., Emancipation Day holiday falling on that day. Because of this holiday, the tax deadline is pushed back to the following Monday. If you are a resident of Maine or Massachusetts, you have until April 19 because of Patriots’ Day.

What is due on the normal deadline:

  1. Your tax return and any tax you owe
  2. Or a request for an extension
Extended deadline: October 17, 2016

If you cannot submit your tax return by April 18, you should file for an extension. You can file for an extension by submitting Form 4868 by the April 18 deadline or using a service like TurboTax Easy Extension. By filing an extension, you will receive six more months to file your return and avoid the failure-to-file penalties.

It is important to understand that even if you file for an extension, you still must pay whatever tax is owed by April 18. The extension is for your tax return documentation, not money owed. Interest will be charged if you do not pay what you owe by this date. The IRS also offers a few different payment options if you cannot pay in full by April 18.

Overview of Research

Our research team was led by tax expert and IRS enrolled agent Susan Renzo. Susan helped us compile an initial group of 17 established tax brands, narrow that list down to a final 10, and evaluate each one across 12 key features selected for their importance to tax software users.

Susan Renzo
Susan Renzo

IRS Enrolled Agent

Susan Renzo is an IRS enrolled agent with over 20 years experience in taxes. She is focused on personal and small business returns and is also an instructor of tax theory and practice.

We determined the final ranking by using a weighted methodology also created by Susan. The methodology consisted of the 12 key features we researched, which were categorized into five core metrics: Interface and Support (30%), Tax Services (30%), Cost (15%), Security (15%), and Extra Features (10%).

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The Best Tax Software of 2016

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Methodology

Our expert

Enrolled agent and master tax advisor, Susan Renzo, guided our research team in creating this ranking.

Susan Renzo is an IRS enrolled agent with over 20 years experience in taxes. She is focused on personal and small business returns, writes for TaxHelp.org, and is also an instructor of tax theory and practice.

How we selected our initial test group

To compile our starting group of tax software products we searched online for established brands and leveraged existing tax software reviews.

These reviews included:

Here was our initial group of 17 tax products:

  1. 1040.com
  2. 1040Now.net
  3. E-File.com
  4. ESmartTax.com
  5. ExpressTaxRefund.com
  6. ezTaxReturn.com
  7. FileYourTaxes.com
  8. Free1040TaxReturn.com
  9. FreeTaxUSA
  10. H&R Block
  11. Jackson Hewitt
  12. OLT.com (OnLine Taxes)
  13. OnePriceTaxes.com
  14. TaxACT
  15. TaxPoint.com
  16. TaxSlayer
  17. TurboTax

How we narrowed our list down

Our expert created this minimum criteria for a tax software product to be reviewed by our team:

  • Must not have extremely poor customer reviews (via sources like BBB.org)
  • Must have enough available information about their features and services
  • Must not have a poorly maintained or spammy site

We cut these seven tax products:

  • 1040Now.net, E-File.com, ExpressTaxRefund.com, ezTaxReturn.com, FileYourTaxes.com, Free1040TaxReturn.com, OnePriceTaxes.com

Leaving us with a final group of 10 tax products to rank:

  1. 1040.com
  2. ESmartTax.com
  3. FreeTaxUSA
  4. H&R Block
  5. Jackson Hewitt
  6. OLT.com (OnLine Taxes)
  7. TaxACT
  8. TaxPoint.com
  9. TaxSlayer
  10. TurboTax

How we selected which data to use in our methodology

Our expert chose 12 key features to grade each tax product against. These features were selected from her professional experience dealing with online tax returns, recommendations from existing tax software reviews, and our initial research of the 10 final tax products.

With these 12 key features selected, we then organized them as sub-metrics into five core metrics. This was to simplify how we would calculate our rankings and to allow Susan to weight certain metrics over others, based on how important they were to users.

We settled on these five core metrics consisting of the 12 sub-metrics:

Metric 1: Interface and Support (30% of final score)

  • Ability to import W-2
  • Autosaves information for next year’s return
  • Customer support services and average wait time on support phone call

Metric 2: Tax Services (30% of final score)

  • Levels of service offered
  • Audit support
  • Tax databases (deductions, employers, and forms)

Metric 3: Cost (15% of final score)

  • Price
  • Fees users pay with tax refund

Metric 4: Security (15% of final score)

  • Security measures
  • Company’s BBB rating

Metric 5: Extra Features (10% of final score)

  • Refund collection options
  • Guarantees and other unique features

Except for the BBB rating, we used each company’s website and their product information to compile our research.

NOTE: There are a number of features that come standard with nearly all tax return products. Basics like saving your progress mid-return or maximum refund guarantees are so common that it is simply not worth reviewing them in-depth. The five metrics we’ve chosen, and their associated data points, are meant to capture the major differences product to product.

How we scored our methodology

Susan reviewed each tax product against our 12 sub-metrics. A score of 1-10 was assigned for each sub-metric, where a 10 was given to the tax software that performed the best in that feature and 1 the lowest. Core metrics were then determined by their sub-metric scores.

For example, TurboTax received a 4.0 score for Cost. The Cost metric is made up of two sub-metrics (overall price and refund fees); here’s how TurboTax scored for each one:

  • Overall Price – 1/10
  • Refund Payment Fees – 7/10

Averaging each of these sub-metrics (both received equal weight) is how TurboTax received a score of 4.0 for Cost.

Finally we took each product’s score on the five core metrics, applied the weights (as described in the breakdown in the previous section), and calculated the end ranking.

Understanding Tax Software features

What tax software features matter and why?

1. Interface & Support back to metric

Very Important

30.00% of our methodology score

Our expert chose this core metric as very important because when a tax product is fast and easy, with a great interface and customer service, people will come back for future returns, especially when their tax situation hasn’t changed. The interface is what users will spend the most time within, so it’s worthwhile to pick one that makes filing your return a breeze.

The clearest indicator of this metric is whether or not a product’s interface is user-friendly. The best software asked straightforward questions and auto populated forms. We also liked products that clearly tracked returns, identifying checkpoints and accomplishments along the way. When automated answers didn’t suffice, we expected service teams to be prompt and well informed.

Another indicator of ease is autosave. Every company that made our rankings has some version of the feature, allowing users to immediately plug in relevant information from last year’s return. Some autosave a user’s info for several years. The best will even let you import information from a previous year’s tax return if it was completed on competitor software.

Important caveats and notes: Most software on the market requires users to move through their tax filing in a set order. This sequence lets the software calculate the return in a logical order, identifying every appropriate deduction and credit. Simpler software tends to let users jump around. Only those with a strong grasp of their tax situation should do their return out of order, as it is easy to miss key savings.

Highest Scoring Companies in Interface and Support
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2. Tax Services back to metric

Very Important

30.00% of our methodology score

Our expert chose this metric as very important because tax services determine your ability to maximize your return and reduce your chances of an audit. We looked into each software’s tiers of service (for different filing statuses), their audit support, and size of tax deductions database.

Every company we’ve reviewed offers at least two tiers of tax software, with prices rising as they go from simple to complex returns. The more you pay, the more features you get.

Two of the keys when looking for rigorous software are a product’s audit support services and their deductions database. Most products come with some amount of audit support automatically, however this support tends to be little more than a basic review of the return you filed. The best companies offer full representation from a tax professional for a fee.

A deductions database refers to the number of deductions each tier of software looks for as you file your return. Most of the software we tested assisted users with standard deductions. However, only some products at certain tiers offered assistance with itemized deductions. Some products had even more unique databases, such as a directory of accurately priced items for charitable donations.

Important caveats and notes: While we generally favored companies with several tiers of software, we recognized that some companies were much more focused on software for basic returns. Their products tend to be far less encompassing because their user base doesn’t need as much to file a proper return. Our ranking profiles identify these lighter products; if you are single with very little in the way of investments, loans or work expenses, these services, while not technically as thorough, could be ideal.

Highest Scoring Companies in Tax Services
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3. Cost back to metric

Important

15.00% of our methodology score

Our expert chose this metric as important because the best software shouldn’t break your bank to pay for it. Also, the best software would have the least amount of fees to use its services.

Cost looks at how much each company charges for their various tax products. We review what they charge at each available tier, along with all additional fees, such as the cost to pay with your refund or the cost for services like premium audit defense or the cost to pay with your refund. When reviewing, we also were careful to consider the “bang for your buck” factor. Products that truly outdid the competition but cost a bit more were still favorably reviewed.

Important caveats and notes: Beware, companies often raise their prices as the filing season draws to a close. Some will honor your purchase price no matter when you complete the filing; others will charge a higher price if you file in the last month or so of tax season, even if you started at a lower price. It pays to research a company’s record with variable pricing.

Highest Scoring Companies in Cost
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4. Security back to metric

Important

15.00% of our methodology score

Our expert chose this metric as important because security is a major issue in today’s tax industry. Fraudulent filings, taking someone’s name, social security number and date of birth to file a phony return and scoring the refund, are rampant. And with the government declaring identify theft “America’s fastest-growing crime,” there is no sign of a slowdown.

Top tax companies have beefed up their encryption and authentication services in the last year. As part of our review, we dug into the fine print of privacy policies and security releases to understand the measures taken. In general, we favored companies employing SSL encryption, various authentication processes, on-site or on-tool tracking and alert systems and dedicated security teams.

Important caveats and notes: We did not thoroughly vet third-party security companies, such as TrustE and Entrust. Nonetheless, we take their security verifications as evidence of an overall secure product.

Highest Scoring Companies in Security
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5. Extra Features back to metric

Somewhat Important

10.00% of our methodology score

Our expert chose this as somewhat important because these features have the least amount of impact on your tax return. These extra perks are not as important as a great interface or the depth of tax services, so we weighted this metric accordingly.

Extra features, as you’d expect, is our assessment of the unique or uncommon features offered by each company at each level of their software. Arguably the most important feature we looked at was refund collection options. Beyond the standard direct deposit or check-in-the-mail return, many companies allow their customers to receive refunds via a prepaid debit or gift card, often with a bonus attached, assuming certain requirements are met, such as promoting their brand or signing up for an additional service. These bonuses can add between 5 and 10% to a return, which for many can be a significant amount of money.

We also looked at the various product guarantees and satisfaction standards companies hold themselves to, strong indicators of customer commitment. And, finally, the apps, if any, released by each company and the ways in which they interact with their software.

Highest Scoring Companies in Extra Features
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Editor's Awards

TurboTax remains the industry leader, with the best interface and a comprehensive suite of tools and services.

TurboTax is the best selling tax preparation software in the United States for a reason. Their interface is, bar none, the cleanest and easiest to use, with an excellent Q&A format that makes the refund experience fast and fluid. The hallmarks of TurboTax design are short pages, with cheery icons and easy to follow tasks. Their software is unmatched in its commitment to user confidence, maintaining an enthusiastic and reassuring tone throughout the return ― this approach has let them excel at bringing in new customers.

After an initial set of questions, the software opens up, permitting users to jump from section to section, a smooth process with no noticeable lag. The search bar and customer service features were responsive and effective; once a query is submitted, users are told how to best contact a representative, with current wait times for calls listed.

Features are in abundance, with many of them identified in our metric charts above; standouts include a tool for uploading tax documents, the audit risk meter and the tax timeline, tracking all progress made with the tool. One complaint is the location of tools: some feel far too hard to track down, and once used, TurboTax does not make them any easier to reopen in future sessions. But minor issues aside, TurboTax remains the definitive tax prep software and the easy choice for many.

Drawbacks:

  • Price can be a limiter, with premium software easily climbing over $100 total for federal and state returns. However, if your tax status is complicated enough to warrant advanced software, you’ll want to seriously consider shelling out for the best.
  • Some may find the smoothness and reassurances of TurboTax off-putting. At times it can feel as though you are disconnected from the actual forms being prepared.
  • TurboTax has had a few public snafus over the last two years: an attempt to raise prices and force more user upgrades, which they eventually backed away from, and a series of reports of fraud and missing refunds tied to their software.

Testing Scores:

  • Interface and Support – 9.8/10
  • Tax Services – 9.2/10
  • Cost – 4.0/10
  • Security – 10/10
  • Extras – 9.6/10

Reputation:

  • #1 – Top10Reviews.com
  • #1 – TheWirecutter.com
  • “Best Overall” – Reviews.com
  • #1 – TheSimpleDollar.com
  • 4.1/5 – MoneyCrashers.com
  • 3.5/5 – PCMag.com



H&R Block is the only company that truly rivals TurboTax on all fronts, even outshining our #1 in customer service.

H&R Block invented paid tax preparation more than 60 years ago. Today, they are the largest provider of tax preparation services in the world, with over 12,000 U.S. locations alone. That said, in the past few years, the company’s tax software has earned its place at the table.

Like TurboTax, H&R Block has an impressive selection of online and downloadable products, covering every conceivable individual return. But unlike TurboTax, H&R Block is backed by an arsenal of representatives in offices nationwide. Their support makes the company’s customer service experience unrivaled. At any point in a return, customers can turn to live chat, a 24/7 phone line or, if they so choose, a visit to their neighborhood location.

As for the software itself, H&R Block’s interface is as straightforward as they come, feeling both minimal and highly functional. What it lacks in personality, at least when compared to TurboTax, it makes up for in a responsive, no nonsense interface. We also found the site’s Help Center to be one of the best on the market: excellent resources clearly laid out.

It’s worth noting you are required to complete your return in a specific order. We found that by clicking around on the software, we sometimes confused the system, making it difficult to return to where we had left off. H&R Block is an interesting alternative to TurboTax, with a more professional, orderly way of handling returns. It knows what it is and it works incredibly well.

Drawbacks:

  • It can feel as though H&R Block’s software remains a step behind TurboTax’s. Minor reasons include a slightly less welcoming interface and the feeling that everything is a bit less automated and therefore more work. Given TurboTax is exclusively a tax software company, this isn’t too surprising. However, every year it feels as though H&R Block draws closer to their top spot.
  • Noticeable lack of support tools, such as calculators, audit meters or document managers.
  • H&R Block’s software has been on the receiving end of bad press in year’s past, namely for its part in thousands of delayed refunds in 2013.

Testing Scores:

  • Interface and Support – 9.6/10
  • Tax Services – 9.6/10
  • Cost – 4./10
  • Security – 10/10
  • Extras – 9.5/10

Reputation:

  • #3 – Top10Reviews.com
  • #3 – TheWirecutter.com
  • “Best Customer Support” – Reviews.com
  • #2 – TheSimpleDollar.com
  • 4.2/5 – MoneyCrashers.com
  • 4/5 – PCMag.com



TaxAct

The model alternative to our top two, TaxAct is built to be simple and affordable.

TaxAct has succeeded in the online tax software market for over 15 years; their staying power is due, in part, to the fact that they were the first software company to offer free filing for low income filers. For many, this solidified TaxAct’s reputation as the cheap alternative to TurboTax and H&R Block ― a product for basic returns with little to no frills.

In some respects, the TaxAct design and interface feels like a light version of TurboTax. The required Q&A format and the process of examining life events upfront feels very reminiscent of our #1. The software’s right hand menu is sleek, letting users quickly toggle between a knowledge database, completed forms, uploaded documents and calculation tools. Some may prefer each feature to have its own dedicated spot on the interface, but the choice fits the stripped down feel, making the experience less cluttered.

Other smart features include site bookmarks, a strong suite of tools for year-round prep and a cloud-like collection of all IRS forms.

By far the biggest issue with TaxAct is its lag time. Whether you are launching the software, moving from tab to tab within the tool or opening up help windows, things feel slow. Users will find themselves far too acquainted with the “Processing…” animation, at least when compared to all other software we tested.

Drawbacks:

  • Customer service not a major part of experience; TaxAct highly prefers you rely on their knowledge database for answers.
  • Some forms, like the 1041 and 1065, are not bundled into returns and instead have separate, expensive filing fees.

Testing Scores:

  • Interface and Support – 8.3/10
  • Tax Services – 8.3/10
  • Cost – 7/10
  • Security – 8/10
  • Extras – 8/10

Reputation:

  • #2 – Top10Reviews.com
  • “Best Bargain” – Reviews.com
  • #3 – TheSimpleDollar.com
  • 4.3/5 – MoneyCrashers.com
  • 4.5/5 – PCMag.com



OLT is the most affordable tax software we ranked but it's held back by a dated interface and restrictive features.

OLT shines most is its price point, taking our award for overall most affordable product for 2016, but the clunkiness will likely outweigh the savings. OLT is also lacking in quality customer service, with live chat support off limits to basic users and basic audit assistance reserved for premium members only.

Drawbacks:

  • Phone support only available during designated tax season.
  • Bare bones, with none of the features or perks commonly put on display by competitors.

Testing Scores:

  • Interface and Support – 6.3/10
  • Tax Services – 5/10
  • Cost – 9.0/10
  • Security – 7.5/10
  • Extras – 7.5/10

Last Updated on April 2, 2016

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